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1
Land Sales and Land Title Amendment
LAND SALES AND LAND TITLE
AMENDMENT BILL 1997
EXPLANATORY NOTES
GENERAL OUTLINE
Objective of the Legislation
The objective of the Bill is to amend the Land Sales Act 1984 to remove
the constraints on the pre-registration selling of all freehold and leasehold
land (`proposed allotments') and in doing so, provide adequate consumer
protection measures.
Reasons for the Bill
The Land Sales Act 1984 (the Act) places restrictions on selling proposed
allotments before the plan of subdivision is sealed by the local government
(`pre-registration selling') and provides certain consumer protection
measures for purchasers entering into such sales. By this stage, the
allotments are readily identifiable and either the developer has completed the
work necessary for the purpose of the subdivision to the satisfaction of the
local government, or the local government has bonded the developer. In the
latter case, if the developer fails to complete the work to the local
government's satisfaction, the local government would have the work
completed.
The Act also provides that, if the final size and topography of the
allotment differ from that originally expected by the purchaser, the
purchaser may avoid the contract if he or she is materially prejudiced by the
difference. In these cases the purchaser will receive a refund of deposit
monies which have been held in trust. Section 19 of the Act allows a
person, proposing to subdivide allotments into not more than five proposed
allotments, to apply for an exemption from compliance with all or any of
the restrictions on contracts of sale. Section 7A provides that the
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Land Sales and Land Title Amendment
prohibition on pre-registration selling of allotments does not apply to large
transactions, that is, transactions in which six or more allotments are sold
by the one vendor to the one purchaser. This provision does not directly
affect consumers, and was intended purely to deal with inter-developer
transactions.
For several years, the real estate and development industries have been
lobbying the government to amend the Act to remove or lessen the
restrictions on pre-registration selling of allotments. There is agreement that
the inability of developers to sell proposed allotments at the pre-registration
stage, when engineering drawings (if required) have been approved, is
hindering development in that sector because developers have had difficulty
in obtaining finance on satisfactory terms in the absence of concluded
contracts for sale. By contrast, provision already exists to sell building units
and group titles (`proposed lots') `off the plan' at the pre-registration stage,
and this confers an unfair commercial advantage on developers in that
sector.
There is no compelling reason to limit the pre-registration sale of
allotments at the point where subdivision has been approved, provided that
certainty of identification of the land purchased is assured. The proposed
amendments to the Act will not infringe its original policy objectives of
minimising as far as possible the deliberate or inadvertent misdescription of
land; and providing readily available remedies to consumers who are
nevertheless adversely affected.
Ways in which the objective is to be achieved
The Land Sales Act 1984 is being amended so that:
· pre-registration sales of proposed allotments at the engineering
drawings stage be permitted under the Act;
· there be provisions, including the supply of a disclosure statement
and disclosure plan to a purchaser, to ensure that a proposed
allotment, in relation to which a registrable instrument of title is
ultimately delivered to the purchaser, is substantially identical to
that which was originally purchased by him or her;
· if the allotment is not substantially identical, but there is a
significant variation between the disclosure plan and either the
plan showing the constructed works or the plan proposed to be
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Land Sales and Land Title Amendment
registered, the purchaser have an automatic right to avoid the
contract of sale;
· where the allotments are substantially identical, developers and
purchasers be able to enforce their contracts against each other at
all times to allow commercial certainty to developers and
financiers;
· the existing consumer protection mechanisms concerning
retention of deposit monies in trust accounts be retained, and
deposits not exceed 10 per cent of the purchase price;
· there be no additional certification requirements imposed on local
governments so as to avoid any increased financial or
administrative burden on them;
· if there is a delay of more than 18 months between the date of the
contract and the date of delivery of a registrable instrument of
transfer for a proposed allotment, the purchaser have a right under
the Act to avoid the contract (replacing the present period of nine
months);
· if there is a delay of more than 42 months between the date of the
contract and the date of delivery of a registrable instrument of
transfer for a proposed lot, the purchaser have a right under the
Act to avoid the contract (replacing the present period of 36
months);
· the Ministerial discretions to extend the periods of automatic
avoidance be removed.
Administrative Cost to Government
The proposed amendments will not result in any significant costs to
Government. The only costs will be those consequent upon the preparation
and dissemination of information to vendors and purchasers on their rights
and obligations (which attend any legislation the responsibility of the Office
of Consumer Affairs).
Consistency with fundamental legislative principles
The Bill is consistent with fundamental legislative principles.
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Land Sales and Land Title Amendment
Consultation
A discussion paper was prepared and was forwarded for consultation to
a large number of stakeholders in July 1996. Submissions were received
from the legal profession, surveyors, financiers, developers and industry
groups, local governments, Queensland Government Departments and
consumers. A draft Bill was circulated widely in early 1997. The Bill
develops many of the proposals contained in the discussion paper as the
result of submissions received.
NOTES ON CLAUSES
PART 1--PRELIMINARY
Short title
Clause 1 provides the short title of the Bill.
Schedule
Clause 2 refers to the schedule of consequential amendments.
PART 2--AMENDMENT OF LAND SALES ACT 1984
Act amended in pt 2
Clause 3 states that the purpose of the Part is to amend the Land Sales
Act 1984.
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Land Sales and Land Title Amendment
Insertion of new s 2
Objects of Act
Clause 4 inserts a new section 2 in the Act which sets out the objects of
the Act, including a provision that the objects of the Act are to be achieved
without imposing any additional obligations on local governments as the
result of the amendments.
Amendment of s 5 (Application of Act)
Clause 5 replaces the term `relevant land' with `proposed allotment' in
section 5 of the Act.
Amendment of s 6 (Interpretation)
Clause 6(1) removes the definitions `land held from the Crown for an
estate of leasehold', `relevant freehold land' and relevant leasehold land' as
they have been replaced with the term `proposed allotment'.
Clause 6(2) inserts definitions for a number of new terms consequent
upon the amendments to sections 8 to 10.
Clause 6(3) replaces the term `relevant land' with `proposed allotment'
in the definition of registrable instrument of transfer.
Clause 6(4) replaces the term `leasehold land' with `State leasehold land'
in the definition of registrable instrument of transfer.
Clause 6(5) removes `sale or' from the definition of `sell' as it is
unnecessary (see section 32 Acts Interpretation Act 1954).
Clause 6(6) replaces the term `relevant land' with `proposed allotment'
in the definition of `vendor's agent'.
Clause 6(7)-(12) replaces the term `relevant land' with `proposed
allotment' in section 6(2).
Clause 6(13) removes `sale or' from the reference to `sell' as it is
unnecessary (see section 32 Acts Interpretation Act 1954).
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Land Sales and Land Title Amendment
Amendment of pt 2 (sale of relevant land)
Clause 7 replaces the term `relevant land' with `proposed allotments' in
the Part 2 Heading.
Omission of s 7 (Construction of certain provisions)
Clause 8 removes section 7 as it is unnecessary.
Amendment of s 7A (Part not to apply to large transactions)
Clause 9 replaces the terms `portion', `subdivisional portion' and
`proposed subdivisional portion' of relevant land with `proposed allotment'
in section 7A.
Amendment of s 8 (Restriction on selling and purchasing)
Clause 10(1) removes the reference to purchasing in the heading to
section 8, to make it clear that section 8 provides that it is only possible to
sell a proposed allotment upon certain conditions.
Clause 10(2) removes section 8(1), which provided that relevant land
could not be sold prior to the subdivisional plan of survey being sealed, and
replaces it with firstly, a provision allowing a proposed allotment of
freehold land to be sold after approval of the subdivision application and
secondly, a provision allowing a proposed allotment of State leasehold land
to be sold after approval by the Minister under the Land Act 1994. Section
8 has been amended on the basis that it is possible to describe adequately
the land the subject of a contract of sale at the engineering drawings stage.
Clause 10(2) also removes the relevant penalty provision from section
32 and places it in section 8, and Clause 10(3) removes section 8(3) as it is
unnecessary.
Amendment of s 9 (Identification of land)
Clause 11 removes the existing section 9(1) and replaces it with
requirements for the provision by the vendor of a disclosure statement and
disclosure plan, or a copy of the approved plan of survey sealed under the
Local Government (Planning and Environment) Act 1990 (the `sealed
plan') to the purchaser at the time of entering into the contract. Those
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Land Sales and Land Title Amendment
vendors who choose not to sell until the point at which they have a sealed
plan (for which the Act currently provides), are not required to give the
purchaser a disclosure statement or plan.
Clause 11 also provides that a purchaser may avoid the contract prior to
being given the registrable instrument of transfer if the vendor contravenes
this section, with the exception of the requirement to state, in the disclosure
statement, the purchaser's and vendor's full names and addresses and the
day the statement is signed: breach of these requirements will not provide
the purchaser with an opportunity to avoid the contract. This provision
recognises that only substantive rather than technical breaches will provide
the purchaser with such a remedy. Clause 11 removes the relevant penalty
provision from section 32 and places it in section 9 and renumbers the
existing section 9(2) as section 9(4).
The disclosure statement is to be signed by the vendor and purchaser and
state the full name and address of both the purchaser and the vendor; state
that the purchaser has been provided with the disclosure plan; state that the
purchaser has been given the opportunity to inspect the allotment as pegged
(or not pegged if it is impossible to do so); state the purchaser's rights and
state the day the statement is signed. It is important that a purchaser has the
opportunity to inspect a proposed allotment as pegged because it would be
very easy for a purchaser to be confused about the precise location and
extent of the land being purchased.
The disclosure plan includes the details shown on the proposal plan
which accompanies the subdivision application for the land (the term `land'
is used to maintain consistency with the Local Government (Planning and
Environment) Act 1990); the metes and bounds description of the proposed
allotment; a contour plan showing the natural surface of the land with a
contour interval of 500 mm for zones other than rural or rural residential;
and for rural and rural residential zones a contour plan with intervals
appropriate to the area; and final surface contours as specified in the
engineering drawings. The requirements relating to contour plans for urban
development are different from rural development, due to the different
requirements of both and the availability of mapping in rural areas.
Replacement of s 10 (Delivery of registered plan)
Clause 12 replaces the existing section 10 with requirements for the
provision by the vendor of notice about significant variations between the
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Land Sales and Land Title Amendment
plan of survey which the vendor proposes to register and the disclosure
plan, or the plan showing the works as constructed and the disclosure plan.
Clause 12 also provides that a purchaser may avoid the contract prior to
being given the registrable instrument of transfer if the vendor contravenes
this section. Where the vendor has given notice of a significant variation,
the vendor may not deliver a registrable instrument of transfer to the
purchaser and the purchaser may not be required to pay the outstanding
purchase monies for 30 days after receipt of the notice. This time frame is
considered necessary to allow consumers scope to exercise their right to
avoid, while providing developers with a cut off point at which they can
proceed to completion of the contract. The 30-day period can be reduced by
written agreement between the parties.
Clause 12 imposes a penalty for breach of section 10 and defines a
`significant variation' to be:
(a) a variation of more than 1% in the details of any linear dimension,
or 2% in the area of the allotment between the survey plan and the
disclosure plan; or
(b) a variation of more than 500 mm in height in details of surface
contours or fill levels between the plan showing the works as
constructed and the disclosure plan.
'Purchaser must be given registrable instrument of transfer and other
documents'
Clause 12 also inserts a new s 10A `Purchaser must be given registrable
instrument of transfer and other documents', which provides that a
purchaser must be given within 18 months of entering into the contract, a
registrable instrument of transfer, a copy of the registered plan of survey, a
copy of the plan showing the constructed works and a statement regarding
any variations between the registered plan of survey and the disclosure plan
or the plan showing the constructed works and the disclosure plan. The
statement as to the nature and extent of variations under this provision is to
be certified by a licensed surveyor. The surveyor is responsible for the
preparation of plans as well as checking all constructed works and is
therefore in the best position to certify any variation between the plans at
minimal cost to the purchaser.
Clause 12 provides that a purchaser may avoid the contract prior to being
given the registrable instrument of transfer if the vendor contravenes this
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Land Sales and Land Title Amendment
section, and the clause removes the relevant penalty provision from section
32 and places it in section 10A.
The purpose of a requirement to provide the plans and statement is that if
purchasers are simply supplied with a copy of the registered plan and a
copy of the "as constructed plan", most purchasers will not be able to
evaluate for themselves if the "as constructed plan" of their proposed
allotment corresponds with that showed on the disclosure plan.
Amendment of s 11 (Contractual requirement re holding of money)
Clause 13 replaces the term `relevant land' with `proposed allotment' in
section 11 of the Act and removes the relevant penalty provision from
section 32 and places it in section 11. Clause 13 also removes subsections
11(3) and (3A) because they are unnecessary.
Insertion of new s 11A
Section 11A: Limit on deposit amount
Clause 14 inserts a new provision which sets a ten percent limit on the
amount of deposit payable by the purchaser and provides that the purchaser
may avoid the contract if the amount payable by the purchaser exceeds that
amount.
Amendment of s 12 (Trustee's duty)
Clause 15 removes the relevant penalty provision from section 32 and
places it in section 12.
Omission of ss 13-15
Clause 16 removes sections 13 (Avoidance of instrument for breach of
section 9) and 15 (Avoidance of instrument upon ground of lapse of time)
because they have been placed in the relevant sections (see clauses 10 and
11). Clause 16 removes section 14 (Avoidance of instrument for breach of
section 11) because it is unnecessary, as section 11(2) itself provides that an
instrument or provision of an instrument which provides for money to be
paid contrary to section 11(1) is void.
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Land Sales and Land Title Amendment
Amendment of s 18 (Declaration of non-application of part in respect
of certain relevant leasehold land)
Clause 17 replaces the terms `relevant' with `State' and `subdivisional
portion' and `proposed subdivisional portion' with `proposed allotment' in
section 18.
Amendment of s 19 (Exemption from part)
Clause 18 replaces the terms `relevant land' and `subdivisional portion'
with `proposed allotment' in section 19. Clause 18 also removes the
reference to purchasing relevant land (see Clause 10).
Amendment of s 21 (Statement identifying proposed lot etc)
Clause 19 removes the relevant penalty provision from section 32 and
places it in section 21.
Amendment of s 23 (Contractual requirement re holding of money)
Clause 20 amends section 23 to make it clear that monies payable under
this section may be paid to a firm of solicitors or a real estate agency.
Clause 20 removes the relevant penalty provision from section 32 and
places it in section 23. Clause 20 also removes subsections 23(3) and (3A)
because they are unnecessary.
The existing holding of trust monies provisions relating to proposed
allotments are retained, while the equivalent provisions relating to proposed
lots have been brought into line with recent amendments to the holding of
trust monies provisions relating to proposed allotments.
Amendment of s 24 (Trustee's duty)
Clause 21 redrafts the section and makes consequential amendment to
the amendment contained in Clause 20. The section has also been amended
to make it clear that a trustee must retain all monies paid under a contract
(including deposits, option fees, instalment payments etc.) in a trust account
until the purchaser or vendor ultimately becomes entitled to the monies as a
result of either non-performance or completion of the sale.
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Land Sales and Land Title Amendment
The existing provisions relating to holding of trust monies for the sale of
proposed allotments are retained, while the equivalent provisions relating to
proposed lots have been brought into line with recent amendments to the
holding of trust monies provisions relating to proposed allotments.
Omission of s 26 (Avoidance of Instrument for breach of s 23)
Clause 22 removes section 26 (Avoidance of instrument for breach of
section 23) because it is unnecessary, as section 23(2) itself provides that an
instrument or provision of an instrument which provides for money to be
paid contrary to section 23(1) is void.
Replacement of s 27 (Avoidance of instrument upon ground of lapse
of time)
Clause 23 replaces the existing provision dealing with avoidance of
instrument upon ground of lapse of time, by removing reference to section
31B. Clause 23 provides that if there is a delay of more than 31 /2 years
between the date of the contract and the date of delivery of a registrable
instrument of transfer in relation to proposed lots, the purchaser will have a
right under the Act to avoid the contract.
Amendment of s 31 (Contracting out of Act void)
Clause 24 replaces the term `relevant land' with `proposed allotment' in
section 31.
Omission of s 31B (Extension of period specified in s 15 or 27)
Clause 25 removes section 31B, that is that while the period of 31/2 years
for avoidance of contracts in relation to proposed lots (section 27 of the Act)
has replaced 36 months, and the period of 18 months for avoidance of
contracts in relation to proposed allotments has replaced 9 months (the
proposed section 10A of the Act) the discretion in the Minister under the
Act to extend either period is removed.
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Land Sales and Land Title Amendment
Amendment of s 32 (Offences against Act)
Clause 26 replaces section 32 heading `Offences Against Act' with
`Penalties under this Act are in addition to other penalties etc' and removes
section 32(1) and (2) because the penalty provisions have been placed in the
sections to which they apply.
Penalties for breaches of the Act are increased, in order to provide a more
realistic deterrent and to bring them into line with those under the Fair
Trading Act 1989. The main objective of these amendments is to remove
the restrictions on pre-registration selling of land without disadvantaging
consumers. Purchasers likely to be most affected by these amendments are
first home buyers, who represent a relatively vulnerable class of consumers.
It is important that, in providing for consumer protection measures in the
amending Bill, adequate enforcement measures are also provided for.
Insertion of new ss 32A and 32B
Section 32A: Responsibility for acts or omissions of representatives
Section 32B: Executive officers must ensure corporation complies with
Act
Clause 27 inserts new sections 32A and 32B which provide respectively
for representatives of corporations or representatives of individuals or
executive officers of corporations to have responsibility for acts or
omissions and to ensure compliance with the Act.
For the same reason as set out above in relation to penalties, provisions
are included which provide that if a body corporate commits an offence
against the Act, each director of the body corporate will be taken to have
committed the offence.
Amendment of s 34 (Evidentiary provision)
Clause 28 replaces the term `relevant land' with `proposed allotment' in
section 34.
PART 3--AMENDMENT OF LAND TITLE ACT 1994
Act amended in pt 3
Clause 29 states that the purpose of the Part is to amend the Land Title
Act 1994.
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Land Sales and Land Title Amendment
Amendment of s 122 (Lodging a caveat)
Clause 30 amends section 122 to provide that an agreement to purchase a
proposed allotment under the Land Sales Act 1984 does not amount to a
registrable interest under the Land Title Act 1994. This clause was inserted
to make it clear that purchasers do not have title to their land before
registration and therefore do not have an interest which would enable them
to lodge a caveat.
SCHEDULE
CONSEQUENTIAL AMENDMENTS
AUCTIONEERS AND AGENTS ACT 1971
Amendment of s 75(1)(b)
This Clause replaces the term `relevant land' with `a proposed allotment'
in section 75(1)(b).
CANALS ACT 1958
Amendment of s 8A
This Clause replaces the term `relevant land' with `proposed allotments'
in section 8A.
© The State of Queensland 1997